Steel prices cycle down from early 2023 spikes

The drop in sheet prices that we’ve seen at the mill level is now spreading downstream—an abrupt shift from just a few weeks ago, according to our latest survey data.

More service centers are cutting prices. I had expected to see an increase in the number of service centers reporting that they were reducing prices (see Figure 1). I did not expect to see such a big jump so suddenly.

Only 4% of service center respondents to our survey at the end of April said that they were lowering prices. That number has since skyrocketed to 50%.

Here is some context: We saw that number rise slowly in late 2021 as supply caught up to demand and then overshot it. What’s happening now more closely resembles what we saw after Russia’s invasion of Ukraine last year: a spike in service centers’ raising prices, followed by an equally sharp decline once the initial shock of the invasion passed.

The drivers are different this time. Prices surged in Q1 2023 when expectations of an economic slowdown and a sheet supply glut didn’t materialize. We were instead greeted in early 2023 by a resilient economy and a supply deficit with imports low, Altos Hornos de México halting production, and new capacity slow to ramp up.